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'It's not fair' - the landlady hits back

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  • #46
    Originally posted by egan123 View Post
    My point is, we all work hard, property has for some time now been exempt from certain taxes
    Property has never been exempt from certain taxes.
    Give some examples.

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    • #47
      That's a load of bollocks, egan. You're spouting drivel from the media. Give examples, as tricky says. "Plus it can claim dp". Like EVERY OTHER BUSINESS.

      Comment


      • #48
        Originally posted by Egan123
        My point is that I also pay tax on gain, why not property investments.
        So if you sold your building business, would you be paying tax on the profit? No... so what's the difference?
        My Profile

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        • #49
          That's where I think he's confused gain w/ profit. Tax on trading profit, yes. Tax on the gain when sold, no.

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          • #50
            I wouldnt know any figures but I would hazard a bet that more people lose more money in property than people lose in business ..you have to balance out the equation, there are more fools involved in buying property than fools running business's simply because its far easier to go to the bank and buy a useless underperforming overvalued house or apartment than it is to run a business in any shape or form.

            Comment


            • #51
              Originally posted by McDuck View Post
              Have you got an actual example, so I can consider the similarities to and differences between a part time Buisness tax take compared to a Hybrid wages/rental tax take.
              Sure. One of my professional skills is writing. I've looked into setting up in business freelancing. If I did, it'd take me time to build up cliental, so I sure wouldn't quit my day job. At best I'd drop to part time.

              In the meanwhile, I'd need a better computer, expensive software, a decent printer, a camera and a car. Capital expenses, so depreciable. I'd also need a home office, printer paper, broadband, business cards, accountant etc. Expenses, so claimable.

              It's almost certain that the business would lose money in the first couple of years (that's partly why I haven't done it!), and if so, I'd claim a refund against the tax on my day job.

              Totally legit, totally reasonable way to start a business.

              Comment


              • #52
                Originally posted by WBuffett View Post
                ... its far easier to go to the bank and buy a useless underperforming overvalued house ...
                I dunno.
                I've done a fair bit of looking over the last few years and these useless underperforming houses are few and far between.
                Each place I look at has doubled in value in the last 7 seven years, and the 7 years before that, and the 7 years before that.
                If you know where all the underperforming houses are then you must be ready for PropertyGuru status as I hear they specialise in such property and would welcome you to their exclusive brotherhood.
                Remember us little people now that you're on your way to financial freedom.

                Comment


                • #53
                  Landlords taking money we need - exporter

                  Landlords taking money we need - exporter

                  4:00 AM Saturday Mar 13, 2010
                  Pat Baker (left) owns 53 houses worth $10 million and makes about $700,000 in rent a year. Grant Straker (right) runs a software company which employs 18 staff and has to go overseas to borrow $2 million. Photos / Natalie Slade, Greg Bowker


                  A $10-million landlady who complained about tougher tax rules has copped plenty of criticism from Weekend Herald readers - including a scathing attack from a software exporter who lives a couple of houses down her street.
                  Seventy-three-year-old great-grandmother Pat Baker said the Government's tax crackdown on rental properties would unfairly penalise her investment in 53 Hamilton houses, which earned $700,000 rent each year.
                  But her Whangaparaoa neighbour Grant Straker, chief executive of software exporter Straker Interactive, said Mrs Baker was being greedy. Ten houses would be okay, he suggested, but 53 was going overboard.
                  He said his business, which had sold website translation systems to the European Union, provided jobs, export dollars and big growth potential.
                  Yet it could not get money from banks and had been forced to Britain for $2 million venture capital.
                  Property investors, however, had easy access to capital, got big tax breaks but did little for New Zealand.
                  "Here I am in business for 10 years, employing 18 people on PAYE tax and paying company tax. Yet the overdraft for our borrowings still has to be secured against our house because the banks won't lend against a business, especially software where you don't get any real money from the company until you sell it. All Pat Baker is doing is taking away houses from young people who could have bought them."
                  Many readers demanded to know how much tax Mrs Baker was paying. She refused to say but she wants people to acknowledge that landlords provide a social service and tax rules should not be changed.
                  "I want to put the property investors' point of view across."
                  Baker estimated $649,000 annual expenses on her properties: $450,000 bank interest, $72,000 in rates, $60,000 in maintenance, $50,000 property management fees and $17,000 insurance.
                  As she lives at Whangaparaoa, she needs a property manager for the Hamilton houses. Tenants blocked toilets, and just in the last few days she spent $6000 on a driveway, $4000 on spouting and $1700 on hot-water cylinders. She estimated that without the depreciation allowance, she might earn less than $10 a week on each house.
                  "Of course buildings depreciate. Why else do I spend thousands of dollars on plumbing, spouting, roof repairs, carpentry, painting, etc? The properties' monetary value increases over time but not the buildings themselves - they wear out. So surely depreciation is appropriate," she said.
                  The Tax Working Group said axing depreciation on buildings could generate $1.3 billion more in taxes annually.
                  Mrs Baker said Inland Revenue had made depreciation compulsory. It was not "some sneaky way of avoiding tax, dreamed up by we wicked property investors."
                  Mr Straker and several other readers predicted that the depreciation allowance meant Mrs Baker would be paying no tax at all.
                  However some readers supported her, saying it was good to hear the other side of the debate.
                  READERS' VIEWS
                  Poor old Pat. I feel so sorry for her that she thinks that her owning all those houses is helping anyone but herself, out there in the market purchasing properties, making it unaffordable for anyone else to actually live in their own home. The proposed changes will make it fair. It's time our investments went into something productive like businesses. - ALBERT McGHEE
                  We are 45, have owned up to seven rentals. We sold down to four so we could get in the right school zone for our daughter. Our plan is to grow our portfolio again over the coming years, now that we are seeing some stability back in the economy. I guess our dream is say 15 to 20 properties. Yes we support painters, plumbers, property managers. We pay rates, we take risks. We do not want to be average. - MARK CHAPMAN
                  She says she never had a high-paying job. $700,000 a year in income seems pretty high to me. The lady seems to have missed the point. How much tax does she pay on the $700,000? What does her tax return say? - DAMIAN PAINE
                  If she had invested her money in a business or in someone else's business, how many people would this business have employed? Wouldn't this be far more than the occasional tradespeople she hires now? And how much would the taxes on these employees have contributed to the economy? She is not singled out at all. We are young homeowners but see many friends struggle to buy a decent house that fits their family. AN HERTOGEN
                  Great to hear the other side of the story. This comes up in discussion at work on a regular basis and I fall on the "it's not just black and white" side of the equation, which doesn't win popularity at all. There's no simple fix. - ANDREW RAE
                  http://www.nzherald.co.nz/nz/news/ar...ectid=10631770
                  "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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                  • #54
                    I don't think there is any doubt that buildings depreciate and cost money to maintain.

                    Claiming depreciation basically means tax payers are subsidising land lords to improve their properties and increase rents.

                    If after these subsidies properties are still making a loss we let them get more tax breaks against other income?

                    I think rental properties should be bought and run to make a profit. If they make a loss year after year people shouldn't be getting subsidies to help them out as this is a personal choice. What sort of business runs a long term loss happily and deliberately?

                    Comment


                    • #55
                      Originally posted by Contrail View Post
                      What sort of business runs a long term loss happily and deliberately?
                      Forestry springs to mind.
                      www.3888444.co.nz
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                      • #56
                        That article is basically sour grapes isn't it?

                        They have both chosen their respective businesses. One is doing really well and is able to borrow lots of money from banks.

                        The other is also doing fairly well but can't borrow money from banks.

                        So therefore the view is that the former business is taking money from the latter. What a load of rubbish.

                        Software would be the more fun business and better for the country in terms of exports too. But so what?

                        And to say the landlord is greedy for owning more than what the software developer considers to be a reasonable number of properties is just plain envy.

                        Perhaps landlords should set how many sales software companies should make each year. Surely more than say 3 is just being greedy isn't it? No one needs more than that, and they're just taking money out of businesses by selling more. Greedy software developers reaching into the pockets of productive businesses and taking their money! Lol.

                        David
                        Squadly dinky do!

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                        • #57
                          Originally posted by Keys View Post
                          Forestry springs to mind.
                          granted forestry is pretty screwed up, but i dont know much about it and its largely a corporate rort


                          The point i was making though is that i don't get to claim depreciation on my home to pay for repairs and i don't get to offset the loss i make on my mortgage against my income.

                          Rental property investors do, even though they also deliberately own houses that make a loss, just like home owners? Good property investors dont need these breaks, they run there investments like a business.

                          People shouldn't be subsidising property investors just so one day in the distant future they make a horrible positive return on a massive fixed asset.

                          I think thats a pretty strange business. I'd rather give the huge tax breaks to exporters, like we already do for farmers to some degree.

                          Comment


                          • #58
                            Claiming depreciation basically means tax payers are subsidising land lords to improve their properties and increase rents.
                            NO!!! Claiming depreciation means the LL is MAINTAINING the property. LL's are required to maintain the property to a safe and healthy standard. To do that there are expenses. To encourage LL's to spend money on the rentals, Governments in the past have allowed depreciation to be claimed.

                            What would you have LL's do?? NOT maintain the properties, provide sub-standard housing and still take market rent???

                            I can hear the howls of injustice already from the Tenants Advocates, left-leaning, hemp-shirt wearing, pot-smoking PC brigade already.

                            The Government and the Public (in general) can't expect LL's to provide a service without passing on the costs to the tenants in some form. What business does that???

                            We're in the business of providing accommodation and providing that service costs money.

                            We're not charitable organisations!!!
                            Patience is a virtue.

                            Comment


                            • #59
                              A different solution

                              I sent this reply to the writer, and hope they start thinking about whether stopping property investment will help exporters and business's like the software developer.


                              I would love NZ business and the economy to perform much better. But there is a simple reason that NZers prefer to invest in property than shares, loans (deposits), business's and other investments. It’s not the tax benefits, its the security! Housing is a safer investment, where as loaning to a business is much higher risk and you could lose your investment in a short period of time. Even loaning to something that is perceived to be much lower risk, such as finance companies, has proven to be a terrible investment.

                              If Pat Baker or a similar investor didn't invest in real estate, would they invest a million dollars in a software exporter? The answer is probably not, as software business would be a much higher risk. She would more likely just invest it in term deposit in a bank, which would create no jobs for maintenance firms or property managers, and no contribution to rates and council costs.

                              Without real estate investment, the software exporter would still be stuck with the same problem, "banks won't lend his business money unless he has real estate as security". Why? Because banks find a business like that to be too high risk too!

                              Criticizing and attacking property investment is not going to help exporters or the economy. Instead why don't we look at real solutions, starting with the question, "why can't NZ business obtain finance now?"

                              Rather than spending millions of dollars on social welfare, advisors salary's, TWG & other committees, why don't we help business's? If NZ business does better, then they provide more jobs, which saves on social welfare. If NZ business's do better, there are more employee's, and if each employee is receiving more money, then they spend more at other NZ business's, then the other business's do better, so they pay their employees more and employ more, so the circle continues.

                              Couldn't the government provide interest free financing to exporters or business's expanding and therefore taking on new employees?

                              Why don't we concentrate on this simple process and circle, rather than attacking property investors who have managed to create a retirement for themselves.

                              "Really, aren't we all just jealous of Pat Baker?"
                              Book a free chat here
                              Ross Barnett - Property Accountant

                              Comment


                              • #60
                                Originally posted by essence View Post
                                NO!!! Claiming depreciation means the LL is MAINTAINING the property. LL's are required to maintain the property to a safe and healthy standard. To do that there are expenses. To encourage LL's to spend money on the rentals, Governments in the past have allowed depreciation to be claimed.

                                What would you have LL's do?? NOT maintain the properties, provide sub-standard housing and still take market rent???

                                I can hear the howls of injustice already from the Tenants Advocates, left-leaning, hemp-shirt wearing, pot-smoking PC brigade already.

                                The Government and the Public (in general) can't expect LL's to provide a service without passing on the costs to the tenants in some form. What business does that???

                                We're in the business of providing accommodation and providing that service costs money.

                                We're not charitable organisations!!!
                                I think landlords are meant to do whatever they want. If they don't maintain properties they drop rental price eventually or tenants move out = market forces?

                                Landlords can pass on the cost of repairs and maintenance.... it's called raising the rent.

                                If landlords are a business they shouldn't need year on year of subsidies to survive. Survive so they can produce nothing that aids the economy?



                                Nice email btw Rosco. I agree except that i think the subsidies for landlords should simply be shifted to exports.

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